With more political uncertainty on the horizon, the UK seems to be holding its breath as people wait for the outcome, but are investors missing opportunities?
Right now, it is difficult to ignore stories of stagnating house prices, widening gaps between asking price and selling price, and lower sales volumes as people are reluctant to take action amid ongoing uncertainty.
Various house price figures released recently have painted a subdued picture of the state of the sector, with Nationwide recording a 0.3% annual property price increase last month, while the ONS/Land Registry found inflation of 1.2% over the year. Halifax was more upbeat, recording a 4.1% annual rise, but the overall message to the public is one of a slow market.
When to invest in property
The housing market fluctuates all the time, and this is never going to change. If you go back a couple of decades, those who acquired property across the UK, but particularly in London, will now be sitting on bricks and mortar worth significantly more than they paid for it – and that isn’t taking into account the rental yields achieved over the years.
It’s not that there haven’t been peaks and troughs in the market over the years, with recessions occurring in most decades, but the long-term result has been the same. Experts can always speculate as to how house prices will change in the short and medium term, but over the long-term they will almost always rise in most areas.
At times of stagnating house prices, it is important to remember that returns in property investment, when looking at buy-to-let, are about more than just capital appreciation. Rental yields are a hugely important part of any investment, and in recent times these have been on the rise for most landlords, particularly in the current low interest rate environment.
Across the country, the number of people renting continues to climb, and with more young professionals leaving the capital to seek opportunities elsewhere, investments outside of London are doing particularly well as demand outstrips supply for good quality rentals.
Investing for the future instead of for now
Even with Brexit on the way, the UK is expected to continue to be a haven for property investment, and should continue to attract high numbers of workers and students who wish to live here due to the country’s strong, stable economy and job prospects.
Many people are waiting to see the outcome of the current political situation, and reluctance to invest during uncertain times is common. However, regardless of when you choose to invest during a property cycle, if the investment is a long-term one and you have a full understanding of the local demand and market, it is always possible to make good returns.
During boom times, it is easy to make money from property as prices inevitably go up whether or not you make a particularly sensible investment. However, when the market is flat or even falling, opportunities are still rife as it is impossible to predict the future – no one knows when the market will begin to recover again, and you might even be more likely to get a competitive price as people look to sell to avoid the risk of price falls.
Read more about property cycles here.
Where to buy
It is vital to do your research when making any property investment. Areas with high levels of regeneration planned and those with major universities can be particularly popular and see the greatest returns, for example. Furthermore, while the London housing market has arguably suffered the most in recent months, parts of the north and Midlands have thrived, and commuter locations outside the capital are also becoming investment hotspots.
